Powell Says Rate Hikes Could Cause a Recession

The video discusses the necessity of implementing a restrictive monetary policy to maintain economic stability. It highlights the risks of high interest rates potentially leading to a recession and the importance of restoring price stability to prevent entrenched inflation. The speaker emphasizes a strong commitment to reducing inflation to 2% over time, which is crucial for achieving a desirable labor market.

What is the potential risk if interest rates rise too quickly?

• A recession

• Higher employment

• Increased economic growth

• Lower inflation

Why is price stability considered crucial for the economy?

• It encourages consumer spending

• It prevents inflation from becoming entrenched

• It leads to higher interest rates

• It reduces government debt

What is the target inflation rate mentioned in the video?

• 2%

• 4%

• 1%

• 3%

What is the ultimate goal of restoring price stability?

• To boost exports

• To reduce interest rates

• To achieve a desirable labor market

• To increase government revenue

What is the public encouraged to believe regarding inflation?

• It will decrease to 2% over time

• It will increase to 5%

• It will remain high

• It will not change